EU Antitrust Watchdog Set to Block Amazon’s $1.4 Billion iRobot Acquisition
Amazon.com Inc.’s ambitious $1.4 billion bid to acquire iRobot Corp., the maker of Roomba vacuums, is encountering obstacles from the European Union’s antitrust regulator.
Officials from the European Commission reportedly informed Amazon during a meeting on Thursday that the proposed deal is likely to be rejected, citing concerns about potential harm to other robot vacuum manufacturers.
Sources familiar with the matter revealed that Amazon has been cautioned about the expected rejection, and a final decision, pending formal approval from the EU’s political leadership, is anticipated by February 14.
Following the news, shares of iRobot, headquartered in Bedford, Massachusetts, witnessed a significant drop of up to 47% in after-hours trading, widening the deal spread from $22 to $28.
The European Commission’s apprehensions about the acquisition are in line with previous expressions of concern, indicating that Amazon’s dominant position as an online retailer might lead to favoring iRobot products over competitors on its platform.
EU interim competition chief Didier Reynders emphasized the importance of Amazon committing to fair treatment for all robot vacuums offered on its platform.
In response to the EU’s concerns, Amazon has declined to make concessions and is reportedly preparing for a legal challenge to contest the commission’s decision.
This anticipated setback in Europe follows the trend of the EU regulator blocking major tech mergers, with Booking Holdings Inc.’s bid for Sweden’s Etraveli Group being rejected in September.
Amazon Faces Regulatory Hurdles in US Over iRobot Deal
Amazon is expected to face opposition in the United States as well, where the Federal Trade Commission is reportedly drafting a lawsuit to block the acquisition.
The EU’s resistance to the iRobot acquisition underscores the tension between Amazon’s retail operations and its ambitions for a smart-home ecosystem centered around its Alexa voice assistant.
The FTC has expressed additional concerns about the potential market control Amazon would gain over smart-home devices, raising privacy issues related to user data.
While analysts view the EU’s decision as a minor setback for Amazon, with the company having resources to explore alternatives, iRobot faces potentially greater stakes.
The company, a pioneer in robot vacuums, has seen demand decline by nearly half since the pandemic peak in 2021, leading to the need for a $200 million financing facility last year.
The EU’s decision diverges from the UK’s antitrust watchdog, which approved the deal, finding limited competitive impact in the British market.
This clash reflects a broader trend of discord among antitrust authorities on both sides of the Atlantic.
As Amazon navigates this regulatory challenge, the broader landscape for Big Tech mergers is becoming increasingly challenging.
Observers note a global alliance aimed at restricting technology companies’ expansion through acquisitions to safeguard competition.